WHAT IS ACCOUNTING
Accounting is often characterized as “the language of business”.
Accounting is normally defined on the basis of functions that it performs.
DEFINITION OF ACCOUNTING
“Accounting has been described as the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.”
The above definition clearly indicates that Accounting provides the guidelines as to how the following processes will be performed.
RECORDING means putting the transactions and events to writing.
CLASSIFYING involves sorting all the transactions in an orderly and systematic manner.
SUMMARIZING means bringing the accounting data together in a form that further enhances their usefulness. This means preparation of periodical reports.
INTERPRETING includes analysis of the results of operations. This may be in the form of percentage analysis or ratios.
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